First, let's clarify the origin and development of the Reserve Proof (PoR) mechanism.

It refers to the logic used by a certain leading exchange previously—calculating the on-chain wallet balance divided by the user's net assets. Why does this ratio often exceed 100%? The reason is straightforward: the wallet address contains not only user funds but also the platform's own assets and risk reserves. The original intention behind this presentation was good—to reassure users and show that the platform's asset coverage is more than sufficient to meet user demands.

It sounds good, but the issues become quite apparent in execution. Many people haven't truly understood how PoR works; when they see a number over 100%, their understanding can easily go astray. Some think that the platform has twice as much funds, but that's not the case. Although the algorithm was designed to demonstrate solvency, in practice, it creates information gaps and understanding costs.

This also reflects a broader phenomenon: there is still considerable room for improvement in transparency among exchanges.